Question

Prepare accounting equation from the following:
(a) Kunal started business with cash ₹ 2,50000
(b) He purchased furniture for cash ₹ 35,000
(c) He paid commission ₹ 2,000
(d) He purchases goods on credit ₹ 40,000
(e) He sold goods (Costing ₹ 20,000) for each ₹ 26,000

Answer 1

S.No.	Explanation	Assets						Liabilities	+	Capital
		Cash	+	Furniture	+	Stock	=	Creditors	+	Capital
(a)	Increase in cash	2,50,000
	Increase in capital									2,,50,000
		2,50,000					=	NIL	+	2,50,000
(b)	Increase in furniture			35,000
	Decrease in cash	(35,000)
		2,15,000	+	35,000			=	NIL	+	2,50,000
(c)	Decrease in capital (Expense)									(2,000)
	Decrease in cash	(2,000)
		2,13,000	+	35,000			=	NIL	+	2,48,000
(d)	Increase in stock					40,000
	Increase in creditors							40,000
		2,13,000	+	35,000	+	40,000	=	40,000	+	2,48,000
(e)	Increase in cash	26,000
	Decrease in stock					(20,000)
	Increase in capital (Profit)									6,000
		2,39,000	+	35,000	+	20,000	=	40,000	+	2,54,000
	Total	2,94,000					=	2,94,000